Cross sectoral thinking on Sustainability
On March 10th, a new EU law went into practice, one on sustainability. To be exact, the Sustainable Finance Disclosure Regulation (SFDR). This regulation states that companies active in providing investment products must disclose how they deal with sustainability standards. So, if you offer a particular sustainable investment, you must explain why this is sustainable. If you, as an investor, decide not to take sustainability risks into account for your investment portfolio, then you also have to explain that you took this decision and why.
The SFDR has different layers; as an investment entity you must explain how you take sustainability risks into account (or not) in general and in case specific products that are being promoted as being sustainable (on an environmental or social matters) the company must adhere to several regulations to be able to call their product sustainable. There is more to the SFDR than described here, but it is important because soon all sectors may be required to provide more detailed information about the sustainability of their products and services.
Why am I explaining this? Because I get so many questions from companies and consumers in different sectors wanting to know if something they buy or procure is sustainable. Are companies just telling the consumer something is sustainable for marketing matters? Or are they really explaining why something is sustainable. And if we look at the fashion industry, can you as a consumer trust that a t-shirt made from biological cotton sold by a fast fashion company is sustainable? The short answer is no, you cannot. Because biological cotton may be more sustainable than generic cotton, if a company’s biggest material impacts are supply chain (poor labour conditions and wages), logistics (shipping & packaging) and large volumes of unsold products going into landfill, then the t-shirt’s material will not make a significant impact. Or the consumer should be able to access information on these issues to make a more informed choice.
Companies that are champions in transparency and disclosure are companies that are willing to tell the true story. Look at the transparency visions of Patagonia, Everlane, Fjallraven or Icebug. The last example is really one of the most honest statements I have ever seen on a garment companies’ website: “Consumption consumes resources. But if you need a pair of shoes, we’re doing what we can to reduce the environmental damage, and choosing a better option sends a signal to the entire industry.” That is brilliant honesty. On the other side you have the fast fashion companies that declare they have a conscious collection, or sustainable choices, where sometimes the only part conscious is the hem. Which can be seen as Green Washing.
So, wouldn’t it be great if these kinds of companies, that market with sustainability are required to provide information on a wider range of issues relating to their full production chain. With both the right disclosure and transparency obligation it would provide a holistic view on the sustainability efforts of a company. It traces back to the core business of a company, and the responsibility companies take in their value chain. It will help consumers, or buyers make a responsible choice that they can trust.
The Responsible Base model can assist in developing sustainability from the core. For creating a decent theory of change. So, if you need help leave us a message.
